Saturday, February 25, 2012

Hi traders - here's your look at the week ahead. The past week wasn't awful, but at least for me, it certainly was much more challenging than past weeks. We did not see as many stocks moving as we did in January and early Feburary, where seemingly every day big winners could be found. We also did not see the same type of follow-through on moves that we saw through January and most of this month. That's not to say that stocks didn't move - just that they were fewer and farther between, and whipsaws were more prevalent. I guess that is to be expected in a consolidation period, which is likely what we're seeing here.

In terms of the indices, both the Nasdaq and S&P continue to ride their nine day moving averages higher, and as long as they do, I can't get bearish. I will continue to ride long setups as long as this support holds. When it breaks, then it will be time to go to cash for a bit and allow the market to right itself.

S&P 500

Nasdaq

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

The Russell is in a very interesting position here. Small caps have moved sideways much more than big caps have the past two weeks - that could allow for a bigger breakout for the small caps (see below) but it could also just point to a lagging group that will fall farther if or when the market finally decides to correct.

TNA

I really didn't find as many setups this weekend as I have in past weekends. The ones below are all of the ones on my watchlist, whereas normally I narrow my watchlist down and try to post 10 or so that stand out to me. I don't know if that is saying something about the overall market here or not - we'll have to wait to see. I am still long (actually I'm fully invested) so I don't know how many new positions I would be adding anyway unless I unload a few first.

CJES, DRIV, ZLTQ, MPC

MGAM, ARAY, RL, ELX

TEA, TSLA, GOL, UA

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Here are the earnings names I will be watching this week. I've checked these names in ThinkorSwim to make sure they do report and according to the TOS data, the list is accurate. These are names that are either setting up in consolidation patterns or have been neglected and are beaten down.

Monday, February 20, 2012

Although it was not a tremendous week for earnings plays this past week, there were still a few that made things worthwhile. I shared some potential earnings plays last Saturday and two of them hit big - DMD and CAB. I was only able to play DMD (and got in late because I didn't trust my instincts) but was able to trade that for a 14% gain in about five hours. I'll take that any day of the week.

What you want to look for in potential earnings plays is a stock that is either neglected or a strong stock that is consolidating its gains. DMD was an example of the first - a neglected stock that no one was really paying attention to at all. With a heavy short interest, a good report could send the stock upward and that's what happened Friday.

CAB is an example of the second - a nice flag was forming here into the earnings report and when the report was released and traders liked the results, the flag was broken to the upside and a big two-day swing was underway.

Here are some names that based on my ThinkorSwim data report sometime this week. Please do your own research on these companies and as I have said many times before, I DO NOT BUY THESE BEFORE THE EARNINGS ARE RELEASED. Perhaps keeping a watchlist of these names and watching them during the pre-market or after-hours session will allow you to catch one or two big movers during the upcoming week. Good luck. Other setups and overall market analysis was released on Saturday.

Saturday, February 18, 2012

Hi traders - I don't have much to say on the overall market going into next week because basically the beat just goes on for this bull market. I (along with many others) fully expected the market to finally rest and pullback after we saw a nasty reversal during Wednesday's session, but that pullback was nowhere to be found and we're still basically waiting. I am not fighting it however - I am long and will continue to move my money around in long positions until the market clearly tells us it is ready to start a well-deserved pullback. So far, that notice hasn't come. It may come on Tuesday or it may come a month from now. Until it does and as long as individual stocks are setting up, there is no play other than the long side.

I'm going to post some ETF charts here because there are some interesting developments in some sectors. Yes, this market has indeed run a long way, but these charts are saying that some sectors may have even further to run. Perhaps we'll see some rotation from strong sectors into lagging sectors instead of seeing an overall market pullback.

Financials are at a key level here - a breakout would be big for the market.

XLF

Real estate is forming a long-term cup with handle, and with TOL reporting this week, this sector will likely be in play.

IYR

Oil remains at a key level and is one reason I was watching many oil stocks last week. I didn't see the follow-through I was hoping for by many of these names on Friday, but based on these charts, this remains a sector to watch going forward.

OIH

OIL

Gold and silver looks very interesting as well so keep an eye on names here like RIC and AG or maybe just the ultra ETFs like USLV or UGLD.

GOLD

Silver

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Here are the main setups I will be watching early next week.

AKAM

ARAY

CALX

COCO

Cup with Handles

ELX

FFN

MGAM

NEP

There are also some recent earnings plays that have started to form beautiful setups, but would ideally rest for a few more days. I have mentioned many times my preference towards these setups in that they now have a catalyst to push them toward higher prices.

NSIT, FSL, KORS, AERL

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Enjoy the long weekend and best of luck trading next week. If you have benefited this year from any of these setups or from my tweets on Twitter, please take a minute to leave a review. Thank you. As always, if you have any comments or questions about the above charts, feel free to email me. If time allows, I'll post some earnings charts for the upcoming week so we can hopefully catch the next CAB or DMD from last week's reports. Take care.

Wednesday, February 15, 2012

Today was as nasty as a day that we have had in 2012 (although that's not saying much) and one of the few examples so far this year of clear distribution in the market. When you look at the number one leading stock of this market and the way its chart looks after today, you have to think that a correction/pullback is close by. Actually, it may have started today.

AAPL

Please don't misinterpret what I am saying here. I am not calling for the start of a new bear market. I am not calling for 2500 on the Nasdaq or something crazy like that. More than likely, I think we will pullback here in the neighborhood of 2-4% before this rally starts back up. It may be more severe than that - it's too early to tell. Heck, we could take back all of today's losses tomorrow and it would not shock me (well, it would be pretty surprising). However, simply put, we have risen to a position where a pullback or correction was way overdue and may have started today. Numbers and stocks were stretched. Pullbacks or corrections are normal and healthy in a bull market - they help stocks set up new patterns from which they can hopefully blast higher.

I still hold one long as of now but put on some short-side hedges today. I am still seeing some really nice charts out there which is one main reason I don't think we will correct for more than a few weeks. I am going to be a little more hesitant being aggressive on the long side here but if names trigger, I will still consider them strongly. The charts below are the names that are at the top of my list.

MX, CALX, MITK, AKAM

RBA, SHS, CDNS, HSFT

It is possible here that instead of a meaningful correction, we will see some rotation from strong sectors to sectors that haven't rallied as much. This is normal in bull markets. With AAPL acting like it did today, perhaps money rotates out of tech into something else for a few weeks or months. One area I am watching closely here is oil. The commodity itself has been basing for about three months now and I am seeing more charts from the energy sector pop up in my scans. There is also the geopolitical aspect of Iran and Israel - who knows how that will play out? I am definitely watching this sector closely. I am not posting charts of the low-float momo names like ROYL, BDCO, etc, but those are probably worth keeping on your lists as well for day-trades.

FST, NBR, NFX, DO

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Good luck Thursday - as of now I am looking at a potential pullback as a good thing in that it will set up some new setups. If we get some really heavy and severe selling over the next few days, then perhaps we will be looking at a deeper pullback, but as long as any selling we see isn't too heavy, we can probably start looking to get aggressive again on the long side in a week or two. Take care.

Tuesday, February 14, 2012

Hi traders - I don't have a ton to say on the overall market here. Today was a little rough overall but the market had a big bounce in the last half hour that took back a large chunk of the large losses. As I went through my scans tonight, I saw very little if any damage to individual charts and continue to see many stocks that had big moves the past few weeks consolidate nicely. I am really trying to focus more on individual stocks here than the overall market as although we could see a pullback at any time, the action in individual names is so positive that there is no reason to try and call a top. I had two names stop out today but I am still holding four longs and will not hesitate to add more if they trigger tomorrow.

Here are the main setups I will be watching tomorrow. There are others on my list but I don't have time to include every single chart. AERL did have a very heavy volume day today so might be worth watching on the day trading side. SMBL is interesting here but a little thin for my tastes. ACXM might be worth watching for a breakout as well. ZNGA was an earnings possibility going into the week but was all over the place after-hours so I have no idea what to expect Wednesday. IF it clears today's high, I may enter for a short momentum swing.

HOTT

Two Oil Names, Two Shipping Names

MPC

MX

SKUL

Here are two of my favorite stocks right now but really they could use another day or so of rest. I don't know if we will see that - a lot probably depends on the overall market - but they both have an earnings report as a catalyst for higher prices if the market cooperates.

MITK

CALX

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Good luck Wednesday - hopefully this market can remain strong and we'll continue to see individual stocks act well.

Sunday, February 12, 2012

Before I post the charts, please make yourself aware of my (and many others) earnings strategy. I am not Jim Cramer. I DO NOT buy these stocks before they report. I wait for the report to come, look at the numbers and the growth, and then look at the after-hours reaction. I then may enter for the following session's hopeful follow-through. This is NOT a fool proof strategy. If you've traded long enough, you know there is no such thing. However, when it works, it usually works very well. Last week, I made four after-hours entries in earnings plays. I took small losses in CSTR (-0.69%) and SNCR (-0.84%) and had nice gains in MITK (+14.16%) and LNKD (still in from $80.80). During the previous week, I was able to get trades in RLD (+8.5%) and SIMG (+11.5%) basically as one-day trades. Others from last week that I didn't get a chance to enter into were BWLD, GUID, and CALX. Check out those charts when you get a chance.

Here is a link to an older article explaining this strategy (which basically uses the idea of post earnings announcement drift or "PEAD"). One thing that I think is important with this strategy is to find stocks that are not super extended into the announcement. It is much better to find stocks that are beaten down or are forming basing patterns. The stocks below are the ones I see that report next week that have potential basing patterns from which to (hopefully) explode. Most also have high short interest ratios as well, which is typically a nice fuel to power a big pop.

CVGI, STEC, ARUN, QIHU

STRA, SFUN, ZIP, DMD

Z, VDSI, RNWK, CAB

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Other names that report next week that might be worth watching include TSLA, SAVE, SPAR, SKX, AIMC, NPTN, UCTT, ACOM, IPI, FOSL, RLOC, XEC, DVN, and ZNGA. I mentioned ZNGA and SAVE yesterday as charts to watch this week. In all likelihood, most of these stocks will NOT be up 10-20% next week, but even if you catch one or two of these plays a week, it can really make a difference on your total return. If you miss them when they do breakout, don't forget above them. They typically will set up nice consolidation patterns from which to enter (or reenter in some cases). Good luck.

Saturday, February 11, 2012

Hi traders - here's your outlook for next week. We finally saw some decent selling on Friday, with the Nasdaq down twenty-three points and the S&P down nine. I don't want to say that the selling wasn't a big deal, but...well...as of now, it was no big deal. Volume was lower and being where we are at, a little selling here is actually a good thing as long as it doesn't become extreme, and certainly Friday wasn't what I would call "extreme" selling. I still have a ton of good-looking charts and as long as that continues, I am optimistic.

The only worrisome action I saw on Friday was in small caps, where the Russell 2000 did close below its nine day EMA for the first time since December 19. This is something to keep an eye on, but perhaps the twenty day EMA will come in as support around 800. As of now, both the S&P and Nasdaq held and are still clearly on buy signals, so unless they break down as well, I think we are OK here.

Russell 2000

To be fair however, right now I only have long positions in LNKD (which I hope I can hold longer-term off of this earnings catalyst), RLD, and a hedge position in TZA. I am ready to enter more longs but if the market doesn't cooperate I shouldn't be hurt too bad. Cash isn't bad here just because of where we are sitting but certainly the move over the past month and a half along with the number of attractive setups still out there should have you leaning much more to the bullish side. I guess overall I am expecting further upside but a little selling in the short-term would not shock me.

Here are ten setups I'll be watching next week. A few have earnings so please read the notes on the charts. I did not include all of the charts I am watching, specificially the ones I have posted over the past week at some point but have not yet triggered (VNET, EZPW, VIT, DANG, CCJ, AGRO for instance). Others that almost made this final list include P, DRIV, CYT, and DDD. If I have time, I will do a video tomorrow looking at some other potential earnings names for next week, as those are where I have made some good money over the past week or so.

CTCT

GMCR

NFLX

SAVE

VELT

ZNGA

RIC

MDC

MX

RLD

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Good luck next week and enjoy the rest of your weekend. As always, if you have any questions or comments about these charts or the website in general, feel free to email me.

Overall Market Timing Score

March 20, 2014 -2March 19, 2014 +1(Max Score +6, Min Score -6)

The Market Timing Score has six factors that I record on a daily basis. These include breadth indicators, moving average indicators, accumulation and distribution indicators, and overbought and oversold indicators.

The max score of the Market Timing Score is +6, but this is very rare. Typically a score of +4 or +5 tells you that the market is very bullish. A score of +3 or +2 tells you that the market is bullish, but there are a few reasons for concern. A score of +1 or 0 tells you that cash is the best place to be. The scores work the exact same way on the negative side for bearish markets.

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Chart Swing Trader is a website intended for the education of online stock traders. The website is an information service only. The information provided herein is not to be construed as recommendations to buy or sell stocks of any kind. They are simply the opinions of the author. It is possible that the editor of this blog may own, buy, or sell stocks presented. All investors should consult a qualified professional before trading any stock. The author is not an investment advisor. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts made by the author are committed at the reader's own risk, financial or otherwise.